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The big snip

01 Sep 2006

Let me first begin with a brief explanation of what VoIP (Voice over Internet Protocol, pronounced ‘voyp’) is. At its most basic, VoIP simply means sending voice calls over the internet. There are many different forms of VoIP.

VoIP has been around for over a decade now but it wasn’t until broadband became widespread around the world that call quality became good enough to go mainstream. We’ve seen a steady stream of providers popping up around the world, such as Vonage and Verizon in the USA.

The earliest VoIP systems only allowed for PC-to-PC calling, with both ends wearing headsets, and poor call quality giving VoIP a bad reputation. Once broadband became widespread in the USA we saw the emergence of phone-to-phone calling over VoIP, with IP phones or IP adapters allowing the end user to make calls just as they would with a traditional landline. The addition of geographic landline numbers is now really pushing VoIP in the limelight with a VoIP line now able to function as a complete replacement for the landline - usually with lower costs and smarter functionality.

So why have we not seen greater take-up of VoIP here in NZ? Primarily because slow uptake of broadband has in the past meant Kiwis haven’t had the bandwidth required to make VoIP calls. Once Telecom’s Jetstream began increasing in popularity the requirement to take a Telecom landline along with the Jetstream plan still meant that demand for a VoIP landline replacement was low. However we have seen some increase in the use of services such as Skype for cheap or free PC-to-PC calling as a way of avoiding high international call costs on Telecom landlines.

Telecommunications companies in NZ are now providing a real choice in broadband and phone line options for Kiwis, completely eliminating the need for a landline. Calls can be made over broadband with the same ease of use as a landline call.

So what effect is this having on the way people use telecommunications?  We’re seeing many changes in the way calls are charged. For example, offers such as free local calling to homes and businesses is a move sure to make a dent in Telecom’s cash cow, which has traditionally charged businesses for these calls. Consumers and businesses alike are finding creative ways to reduce their telephone bill and this is shaking the very foundation that Telecom rests on – fixed line and calling revenue.

Over the next two years we’ll likely see more and more consumers and businesses cutting the landline as broadband uptake increases and consumers become more savvy. We’ll see more demand for VoIP and other services delivered over broadband in its many forms.

Consumers and businesses can now feel confident about taking the scissors to the landline and making the leap to a broadband phone service.